THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

WHITFIELD: Hello again, I'm Fredricka Whitfield. Here's what's making news right now. Reinforcements are being rushed into southern Florida to battle a wildfire burning in the Everglades National Park. Winds are bringing the blaze closer to populated areas of Miami Dade County. A heavy smoke advisory is in effect. Senator Ted Kennedy remains in a Boston hospital as doctors try to find out what caused his seizure yesterday. Wife, Vicki, was among his visitors came at Massachusetts General Hospital. His physician says the 76-year-old senator did not suffer a stroke and is not in any immediate danger.

The Olympic torch relay suspended as china declares three days of national mourning for victims of Monday's earthquake. A moment of silence will be observed tomorrow at the exact time the quake struck Szechwan Province one week ago. The official number of dead now stands at 32,477.

And looking ahead to Tuesday's Democratic primary, Hillary Clinton campaigning in Kentucky today told supporters she has no plans to leave the presidential race. Barack Obama is on the stump in Oregon. He's expected to win there on Tuesday while Clinton is the favorite in Kentucky.

I'm Fredricka Whitfield at the CNN Center in Atlanta. More news at the bottom of the hour. CNN BALLOT BOWL, one hour from now. Right now, YOUR MONEY begins.

ALI VELSHI, CNN NEWS ANCHOR: Welcome to YOUR MONEY where we look at how the news of the week affects your wallet. I'm Ali Velshi. Coming up on today's program: sky-high gas prices, but who is to blame and who should ease your pain. Find out why there really aren't any easy answers to this one.

Plus big-wigs like former fed chief, Alan Greenspan and investment guru, Warren Buffett say the worst is over when it comes to the credit crisis. Well, our big-wig, Greg Hunter, thinks they're wrong and he'll tell us why. And smart places to stash your cash in a low interest environment, no matter how much cash you're holding on to.

But first, gas prices hit a new record Friday. The national average for a gallon of regular unleaded gasoline rising to almost $3.80 a gallon, that's according to AAA. That's up more than 39 cents from just last month. It's the tenth straight increase and the ninth straight record high for gasoline. But you already knew that if you drive a car. Allen Sinai is chief global economist, strategist and president of a Decision Economics, which is a global advisory firm. Daniel Weiss is senior fellow and director of Climate Strategy at the left-leaning Center for American Progress, a think tank that describes itself as one that works for progressive values.

Welcome to both of you. Let's start with you, Dan. What is right and what is wrong for the government to do to step in to help Americans in terms of their prices of fuel. We've heard about a gas tax holiday, we've heard about stopping putting oil into the strategic petroleum reserve, we've heard about curbing speculation amongst oil traders. What do you think is the right thing to do?

DANIEL WEISS, CTR FOR AMERICAN PROGRESS: Well, the gas tax holiday won't work because most of the benefits will probably go to the big oil companies and it's no guarantee that the price savings will be passed on to the consumer. So that is something that should be rejected. Stopping filling strategic petroleum reserves should help on the margins by anywhere from three to five cents a gallon by reducing demand for oil and instead 70,000 extra barrel as day will be put on the marketplace.

We believe that speculators ought to be reined in. An investigation by the Senate found that up to $30 a barrel of oil is due speculation. And the Senate may be considering a bill later next week that would do that by doing two things, first, make sure that people bidding on oil futures have to put down a larger portion of the total bid, the margin, higher than the five percent to seven percent that's on now. Second, is we need to make sure all U.S. trades are routed through the NYMEX to make sure that they have oversight. If they're done offshore, they're basically unregulated and it's the Wild West out there.

VELSHI: All right, just before I go to you Allen, I just want it on bring our viewers up to speed on that last point. We talk about speculation in the price of oil. That means the people who are trading in oil, they don't produce it, they don't use the end result, they are using it as an investment and they don't have to put down all of their own money in order to buy oil futures. It's a very small percentage they have to put down. They borrow some of that and I think that what Dan is saying is that if we limit how much they can borrow, if they actually have to put up more of their own money, they may not take as many risks in oil.

Now Allen, do you agree with the prescriptions that Dan has prescribed -- suggesting? Do you think that will actually help our situation?

ALLEN SINAI, DECISION ECONOMICS: Well, most of them are OK. I think the last one I don't agree with. The actions that should be taken should work through the fundamentals of demand and supply and then the traders and speculators will take care of themselves and we'll get oil prices down.

We have not done enough, not purchasing 70,000 barrels a day isn't going to be enough. I think we ought to, as we have before, dump some light crude on the market, that would help, out of inventory, dump some light crude on the market, maybe even sell out of the strategic oil reserve because that would send a powerful message that we really do care about our oil prices. Fundamentally, we got to have, I'm sure Dan agrees with this, a short and long run energy policy that encourages us to switch out of the oil-based fuels and to conserve.

VELSHI: And I think, Allen, you've hit the point that most people agree on.

SINAI: We really -- if Washington starts to give us some leadership on that, and nobody is yet, if we push them to do that, then guess what, those speculators will get the message, except they're out there and they'll start selling those crude oil futures and we'll get a big downdraft.

VELSHI: Dan Weiss, who -- I mean, I think we all agree on that. Who triggers that, how is that going to happen? Because, at this point, this is a crisis when it comes to energy, when it comes to the amount of money that we spend on diesel for transportation and for farming and the way it works into our food costs and the increase in the prices of the food because of ethanol. I mean, the bottom line is we do have to kind of treat this like a crisis and think of a very long term national and international solution. Who leads that?

WEISS: Well, it's up to the president to lead and this president gets an "F" for failure. He hasn't led at all. I agree with Allen we ought to a some oil out of the strategic petroleum reserve and put that on the marketplace, but you know, the fundamentals on oil are really goofed up right now. The head of Shell Oil just said last month that the fundamentals would lead oil price about $60 a barrel and yet the price is double that. That's due to speculators, that's due to the low value of the dollar, that's due to...

VELSHI: And that's because people don't invest in dollar-based commodities or trading vehicles because they just get a better return. It's like choosing to invest in art as opposed to wine because you think you'll make more money.

WEISS: That's right. And I agree with Allen, we do need long term solutions. But in the short run, Americans are feeling real pain and we believe take they ought to get a rebate paid for by closing oil company tax loopholes and then give a rebate back to the neediest of Americans to offset some of the higher oil and gasoline prices.

VELSHI: Allen, I bet you're going to disagree with that. Tell me why.

SINAI: Well, you know, with some of it. I think the solutions always, I think should work through the markets and the government can do lots of things through tax incentives and subsidies and give some subsidies for expiration and give some tax incentives to say get us to buy more hybrid cars. And I'd rather see the government think of methods to work through the markets to get demand and supply to work that way then to kind of arbitrarily go after the speculators and traders. There's definitely a big premium coming out of traders in the trading premium, but if we don't get at the fundamentals of demand and supply, it's still not going on work. We're only going to be doing a band-aid to hit them in the face for over a short period of time...

(CROSSTALK)

VELSHI: Yeah, Dan.

WEISS: Ali, we don't need more incentives for oil companies to explore. If $125 a barrel isn't enough, I don't know what is. In fact, oil companies hold thousands of undeveloped leases in the U.S. in the Gulf of Mexico and other places that they have not developed. The reason, they'd rather sit on the oil and make more money at a higher price.

VELSHI: All right, we're going to continue to examine this, gentlemen. I'm glad you guys have different perspectives to bring to our viewers so is we can continue to understand why the prices of energy are so high and what might be done about it. Allen Sinai is the president of Decision Economics. Dan Weiss is a senior fellow at the Center for American Progress. Thanks to both of you.

Just a quick programming note. This weekend, tune into a one-hour documentarily with CNN's special correspondent, Frank Sesno, it's called "We Were Warned: Out of Gas." It runs this weekend both Saturday and Sunday at 8:00 p.m. and another presentation at 11:00 p.m. Eastern, right here on CNN. It is worth watching.

Coming up next on YOUR MONEY, when it comes to the economy, is the worst over or is it yet to come? Our Greg Hunter weighs in with an answer that might surprise you. Stay with us.

(COMMERCIAL BREAK)

VELSHI: Mortgage meltdown, credit crunch, we've been hearing these words for so long, if you had a newborn in the last year or so, it maybe their first words. Where are we in this economic downturn? Well, some notable names have let their opinions be known that we might be coming out of it.

Our own Greg Hunter, well, he doesn't necessarily agree.

Are we? Are we coming out of this downturn?

GREG HUNTER, CNN NEWS CORRESPONDENT: Just this past week, the Federal Reserve set a record for handing out cash -- now cash, not treasuries, to the banks, nearly $3 billion a day. They're throwing a lot of money at a problem they say is fixed or on its way to being fixed. Now, it seems no matter where you turn these days, the message is clear, the worst of the credit crisis may be over. Throughout the last two weeks that refrain has been echoed by former Federal Reserve chairman Alan Greenspan, billionaire investor Warren Buffett and Treasury secretary, Henry Paulson.

Now, we have gotten better than expected news about the economy, such as an uptick in first quarter GDP and fewer than expected job losses in April. So when it comes to your money, is the worst really over? Or still yet to come? Consider the words of former fed chief, Paul Volcker who just last month called the current economic situation the "mother of all crises" -- the mother of all. I think that would include the Great Depression. Take a listen to what Volker had to say as he testified before Congress this week.

(BEGIN VIDEO CLIP)

PAUL VOLCKER, FMR FEDERAL RESERVE CHMN: And we are in a most difficult and complicated economic and financial circumstances and we shouldn't doubt that. I would emphasize a point that we often lose sight of, that in the background, this is not just a financial problem, it is an economic problem, we have had an unbalanced economy. This country has spent some years spending a lot more than it's been producing...

(END VIDEO CLIP)

HUNTER: And just this week, RealtyTrac reported a 65 percent jump in foreclosure filings last month versus April a year ago. Listen to this, that's more than 240,000 homes nationwide in foreclosure. That's more homes and that means mort of the mortgage-backed securities held by the big banks and brokerages are also likely to turn sour if the future. In fact, one former fed official told us additional losses for the banks and brokers, that's additional, could be in excess of a half trillion dollars. Why should you care? Because that means the fed is likely to pump out even more money to bail out struggling banks which is leads to raising inflation and that means people like you and me and Ali end up paying more for everything from food to gasoline.

VELSHI: All right, what can they do? You researched this so well, you talked to so many people who seem to know about this. What can be done to fix this situation?

HUNTER: Listen, I'm going to go to the words of the real maestro, Paul Volcker. Now, former fed chairman, Volcker basically says you can't have the fed bailing out and backstopping the banks on one side without any regulation on the other. Things like mortgage backed- securities and other bad debt that the banks and brokerages are now stuck with have no standards, no regular, no public market. They carry this stuff off their books and still do today. And according to Volcker, part of the fixes more regulation to keep the banks and brokerages from needing the kind of big bailouts that we're seeing right now.

VELSHI: All right, well we continue to keep an eye on the economy every week and when you see some silver lining on the cloud, you'll be sure to come and tell us. Greg Hunter, thanks very much for that.

All right, coming up after the break, all those foreclosures that Greg is talking about are costing you money even if you're not even close to looding your home. What you need to know about the mortgage mess coming up next on YOUR MONEY.

(COMMERCIAL BREAK)

VELSHI: Jennifer Westhoven joins us now. She has got her eye on the housing situation which some might say felt like it was getting a little better.

JENNIFER WESTHOVEN, CNN NEWS CORRESPONDENT: It felt like it was, and then we got these numbers this week. They were some of the worst numbers we've seen in 30 years, so very tough, here.

Home sales fell 22 percent in the first quarter and prices fell seven percent and there were huge drops in sales of more than 33 percent in Maryland, Washington, D.C., Utah, California. Here's the silver lining, though. Homes are getting more affordable. We've got the medium price just under $200,000. But we still have this wave of foreclosures that we're dealing with, 54,000 families lost their homes to banks, their homes actually repossessed. And when your neighbor loses their home, your home loses $5,000 in value.

VELSHI: How does that work, because taxes aren't getting paid or because somebody doesn't want to buy a house that's next to a foreclosed property.

WESTHOVEN: I think it has to do more with the latter. This is from the Center for Responsible Lending, but it's just that it's not necessarily desired to live in the neighborhood when there are vacant homes, a lot can happen there.

So, how do you save some money on medicine? People pay a lot for that. Well, first thing, call around. You want to stop around, but your best bet is to get your prescription at Costco. That is from Consumer Reports. It bought a range of America's most popular prescriptions and said that prices for one prescription could vary up to $100, so you really want to make those phone call. After Costco came AARP.com, and then Wal-Mart for cheapest places.

And then, I love this story, after 100 years of making washers, dryers, refrigerators GE says we're done.

VELSHI: I can't even believe that. Look, I'm just waiting for somebody to say that's a hoax. They're getting rid of their appliances?

WESTHOVEN: They're looking to sell their appliance business. But I'll tell you, this is, I think, the nugget that gives you all in a nutshell. In 1953, an 11 cubic foot refrigerator, $500, today, about $500.

VELSHI: Right. And then they -- it's just not that big a growth industry. I mean, are they going to stop selling light bulbs at some point?

WESTHOVEN: I don't know about that, but certainly they made their name on light bulbs and appliances, so very interesting to think of, but they're just a tiny part of this huge company now, they're so diverse.

VELSHI: Jennifer, good topics. Thanks very much for being with us. We will continue to keep you up-to-date on housing. That's a big topic for us. So is inflation. It's tough to run a business when you see oil prices take these wild swings that we've seen of more than $20 in just a few months. But, the weak U.S. dollar means that companies that are going business abroad where things are still pretty good, well, they can still remain profitable. Why does any of this have anything to do with you? Because these are the challenges that face Tom Falk, and he's the CEO of Kimberly-Clark -- It's a company that makes many of the products that you have to buy every week. At the end of day, fancy terms like commodities trading really boiling down to what you're paying for things like tissues, toilet papers, diapers, things like that. I asked Tom Falk about the challenges facing his company.

(BEGIN VIDEOTAPE)

TOM FALK, KIMBERLY-CLARK: There is a tradeoff there, as the dollars weaken, you see commodity price pick up. So our challenge is to really try to manage this with a minimum amount of inflation as we can. Having said that, if you look back over the last three year, we've had over $1.1 billion in cost inflation that has hit our company.

VELSHI: How do you hear from the consumer on toilet paper? I know that probably the packaging has an 800 number, but how do people communicate with you about their paper products?

FALK: You do focus group research, that's one way. That's sort tried and true. Everybody does that and you get consumers to talk about their experiences, what are their problems with the product, you know, how are they using the product. But we've also started to use some new technologies. With all the Web cam type of things, we can put a Web cam on a baseball cap for mom and watch her as she's opening a package of diapers to see how it dispenses, watching her try to keep a wriggling link baby on the changing table while she's getting a baby wipe out, while she's getting a diaper out, and think about how are there ways to make that easier for her so that she can use our products and have a better usage experience.

VELSHI: Where are you seeing increased strength, where are you seeing surprises as far as your products go?

FALK: Well, if you look at the six market which is we call BRICIT, Brazil, Russia, India, China, Indonesia, and Turkey, they make up about half of the world's population, but they're only about five percent of our sales.

VELSHI: Do you see the same suite of products that an American would be use to in most of these countries or are there some things that are sort typically American and North American that don't sell elsewhere?

FALK: Certainly diapers, bathroom tissue and feminine care would be well developed around the world. We find similar products. Sometimes you might fint a slightly slow lower quality or less functionality because consumer's can't necessarily afford to pay for the full robust suite of products. Things like facial tissue are growing outside the U.S., so not as widespread. Things like Pull-Up training pants, baby wipes, those categories are still emerging and growing. So, consumers can afford to get into the basic category like diapers, but their incomes have to improve a bit before there's more widespread uses things like baby wipes.

(END VIDEOTAPE)

VELSHI: Well, coming up, the cure for the common commute. Americans are ditching their cars for cheaper ways to get out to work. We're going to find out which method is winning out. Stay with us, you're watching YOUR MONEY.

(COMMERCIAL BREAK)

WHITFIELD: Hello, I'm Fredricka Whitfield at the CNN Center in Atlanta. We'll get you back to YOUR MONEY in a moment, but first a check of the headlines.

Rescue workers in central China removing hundreds more bodies from earthquake's rubble and the chances of finding survivors are dimming. Today the government said the final death toll will likely top 50,000 and it announced that had three days of national mourning will begin to Monday. The Olympic torch relay is being suspended, as well.

Reinforcements are being rushed into southern Florida, in this country, to help battle a wildfire in Everglades National Park. The blaze broke out Friday. At last report, it covered almost 33,000 acres and was only 20 percent contained.

And President Bush is flying back from his five day tour of the Middle East. In a pointed address at the trip's conclusion in Egypt, the president criticized Arab governments for squelching decent. The trip failed to persuade Saudi Arabia to help with soaring oil prices and it produced no discernible progress to the Israeli/Palestinian front.

And Senator Ted Kennedy is spending a second day in a Boston hospital as doctors try to figure out what caused his seizure yesterday. Wife, Vicki, was among his visitors, today, at Massachusetts General Hospital. Kennedy's doctor says the 76-year-old senator did not have a stroke and is not in any immediate danger.

And for the 11th straight day now, we've got a new gas price record. AAA reports the national average for a gallon of regular unleaded is just over $3.79.

And BALLOT BOWL comes yours way at the top of the hour. We'll hear from Barack Obama, Hillary Clinton and John McCain who appeared last night on "Saturday Night Live." That's the BALLOT BOWL, coming up at 4:00 Eastern Time. More news at the top of the hour, meantime back to YOUR MONEY, right now.

VELSHI: Hi, record high gas prices are pushing consumers to extreme measures. For some people that means ditching their beloved cars and sharing the daily commute to work with lots of other people doing the same thing. Mass transit systems in cities like New York, Denver, San Francisco, Charlotte, Nashville, they've all seen a jump in ridership. Stephen Reich is with the Center for Urban Transportation Research at the University of South Florida where they've also seen a jump in mass transit ridership. He's here to tell us if this change is here to stay.

Hey Stephen, we have heard such interesting stories from people. Our audio engineer here was telling me, and I've hear this from other people, that in their family, they make a list of the errands that she have to run and try and consolidate them so they don't take extra trips. We know truck sales have fallen off a cliff. Are these changes temporary or as we head toward $4 a gallon in gasoline, have we really shifted the way we think about public transportation and the way we use our cars?

STEPHEN REICH, UNIVERSITY OF SOUTHERN FLORIDA: Well, there's some general shift that we are seeing taking place. And we saw it begin when gasoline approached about $3 a gallon. And now that it's approaching $4, we're seeing more of that shift. What we don't know yet is whether people will be become comfortable with the new pricing levels and revert to their old behaviors.

VELSHI: Right, and we've seen that. We've seen sometimes when gas just ticks back a little bit all of a sudden everybody wants the big vehicles again. But those cities I named where there's been an increase in public transportation, that's because the public transportation network exists in those kinds of places. What happens for so much of America where that option doesn't exist?

REICH: You make an excellent point. The data that we're seeing shows that in cities where there's a bus system only in small towns of 100,000 or less, we've only seen like a 1 percent increase in transit rider ship. For those folks that really don't have an option, it's the car pooling, it's the gas conservation measures that everyone talks about that we really see as their only options right now for folks.

VELSHI: I grew up in Toronto, a city with a pretty good public transportation system, but many people complain in a lot of these cities that not enough money was put in over the years to not only keep the system up, but push it ahead. And we know that as municipal budgets get squeezed, partially because of the slow economy and because of foreclosures and people not paying their taxes, does that mean transit systems are getting squeezed, too?

REICH: Absolutely. It's sort of a circular situation we find ourselves in. At the very time when folks who don't normally take transit could be introduced to this as a mode and get comfortable with it and put up with many some minor inconveniences, the ability to try and tap this new market is happening at the very time when transit agency's budgets are being squeezed, tax initiatives are on ballots to actually reduce local expenditures. So these systems are mainly funded by local governments. These are not state and the federal government doesn't provide very much operating assistance for transit agencies in this country at all.

VELSHI: And, in fact, they're often used by people who come to work this particular city but don't live there and they pay their taxes elsewhere. You're in Tampa, Miami is an example of a city that has some transit infrastructure, has not been used very much in the last few years. Atlanta, Los Angeles, places like that where people just haven't taken to it. We're seeing up an up tick I know in Miami an up tick, are we seeing other cities benefiting from the switch?

REICH: We are. And there are cities as you suggest where the investment has been made in the past when costs were a little cheaper and there was some sentiment to build these systems. And they haven't utilized it. Atlanta is another good example where we've seen double digit increases in rail rider ship. The commuter rail system in south Florida has seen double digit increases. And, again, these systems are very energy intensive themselves and their costs are continuing to rise as they are for us as individual commuters.

VELSHI: Steven great to talk to you. Thank you for giving us a little bit of information on this. Steven Reich is the program director at the Center for Urban Transportation Research at the University of South Florida in Tampa. Mass transit isn't the only option for from frustrated commuters or drivers. A growing number of Americans are finding other ways to cut back on their driving. Allan Chernoff joins us with more on this. Alan welcome.

(BEGIN VIDEO CLIP)

ALLAN CHERNOFF, CNN CORRESPONDENT: It's a lot more fun when it's not pouring, but if you want to avoid pain at the pump, there's nothing better than jumping on to your bike and pedaling to the office as opposed to driving. Every business day, Scott Safier pedals to the office. He's been doing it for two decades. These days he navigates midtown Manhattan traffic. After moving to New York last year for a software job at Google.

SCOTT SAFIER, GOOGLE EMPLOYEE: It takes me ten minutes to bike to work. If I were to take any other means of transportation, it would take longer than that.

CHERNOFF: Google encourages staffers to bike, providing a storage room. So does the "New York Times." And gas prices soar and the ozone layer thins, one of the cheapest and greenest ways to commute is on two wheels using the power of your own legs.

PAUL STEELY WHITE, TRANSPORTATION ALTERNATIVES: We're seeing a switch to bicycling as a result of gas prices and our colleagues in Seattle, San Francisco, Chicago, even Houston, are starting to see more and more people taking to their bicycles.

CHERNOFF: A growing number of people are using pedal power to get to the office. In New York City alone, more than 100,000 bikers according to transportation alternative. Driving a typical passenger vehicle costs about 15 cent a mile just for gas. Not only is pedal power free, it's also healthy, a good way to guarantee getting your daily exercise.

LARRY WALLACH, SID'S BIKES: If you ride a bike to work in New York City, you can save over $1,000 a year. Why not save the money and have the fitness.

CHERNOFF: It is a great way to start your day and certainly a good way to wake up because you definitely have to be alert when you're riding throughout streets of a big city like New York. (END VIDEO CLIP)

VELSHI: Allan, when we planned to do this, I don't think we knew that you'd be in the rain, but die hard cyclists, some of them actually do go to work in the rain. Have you seen any of that around? Because you've been up since dawn. Have you been seeing people cycling around even on a day like today where there's rain?

CHERNOFF: Sure, absolutely. Not as many and I wouldn't necessarily advise it. It's not as safe either when you have pouring rain like this. But, sure, if there are people out there in all weather.

VELSHI: The "New York Times" building here, Google, a lot of companies in other cities that are much more cycle friendly than New York, really accommodate people coming and parking their bikes. We don't have that even in the building that you and I work in right now and it's a bit of a struggle for people to try and convince their employers that this is good for them and good for, you notice, their employees. Is there much progress on that front that you know of?

CHERNOFF: I think the momentum is definitely building. What Google is doing is really leading the way. I know there's a push at the "New York Times" to get more space as well. A lot of companies, look if gas prices keep on climbing, more and more people are going to seek out alternatives and in cities, smaller city, rural areas, of course it's much, much easier. New York is maybe one of the toughest places to actually be able to bike to work. But there are thousands of people who actually do it here.

VELSHI: You wouldn't have any objection to me taking this segment and just cutting it and sending it to the CEO of Time Warner; do you, as a suggestion? You can say no. It's not like it's on TV or anything.

CHERNOFF: I think we can afford a bike rack at Time Warner.

VELSHI: Allan Chernoff good on you for braving the rain to make the point that people can do this. This a valid alternative. He looks remarkably fit. I don't look the same when I'm in tight clothes.

Up next, we'll tell you why you should not put your cash in a place that earns more than the rate of inflation right now. Bet you wouldn't expect that to come from us. Stay with us. You're watching YOUR MONEY on CNN.

(COMMERCIAL BREAK)

VELSHI: All right. First of all finance experts recommend that you have three to six months of living expenses stashed away in case of an emergency. Saving that kind of money is hard enough in a good economic times and it is a little tough in these kind of times where so much more of your of money is eaten up by high inflation. The more money that you pay for things.

And there's another hitch. Interest rates are so low that they are outpaced by inflation and that means that the money you stash away could be worth less if you actually have to use it. Walter Updegrave is a senior editor of "Money" Magazine, a good friend of our show. Walter thank you for being here. This is a real pickle that people are in because three to six months expenses for many Americans is a substantial amount of money and then you're going to put it in some account and it really is going to be worth less because you can't get the rate of inflation on most of these CDs.

WALTER UPDEGRAVE, SENIOR EDITOR, "MONEY" MAGAZINE: People are on a treadmill where they keep falling behind and the unfortunate thing is that sometimes people try to do little things to make up for this that can backfire on them. For example, I see people looking into foreign bank CDs, they put their money into annuities, longer term bonds to try and boost up their yield and that can be dangerous because all of these things can either restrict your access to money or they can go down in value.

VELSHI: And the restrict your access to money is an interesting one. Because I actually just had a conversation this week with somebody who thought they had money put aside in a very liquid account. It's not liquid. They're getting a slightly better interest rate, but it was locked in for a term.

UPDEGRAVE: Well we just saw this with the auction rate for third securities. These things are actually marketed, money market fund substitutes. They're basically these notes where you get investor money, you get a yield that's better than a money market fund and what is supposed to happen is they're supposed to be a weekly auction for these where the rate is reset and you're supposed to be able to sell your money or your note at these weekly auctions.

Unfortunately, the auctions kind of failed and all of a sudden people were stuck with these notes, there were no auctions and they couldn't get out of these. They're still getting paid interest, but there's still this question hanging are they going to get out. Some brokerage firms stepped in and buying them back, but some people are still in limbo.

VELSHI: You mentioned something to our producer, and that is you're going to put your money somewhere that is safe, gives you some interest but probably very low, it is going to be out paced by inflation. That is the cost of having a safety net.

UPDEGRAVE: Right. You have to think for my emergency reserve, this three to six months that I need, your primary concern here is safety. You're not trying to get the absolute highest yield. You have other money.

VELSHI: Do that with your retirement savings.

UPDEGRAVE: There you can take a little more risk because it's longer term. But for this money, it is security is utmost importance. So stick to savings account, money market accounts, and short term CDs. Within those groups, you can still shop for high yields and you should be shopping for high yields. You want to do the best that you can within those categories.

VELSHI: But we're not usually hitting 4 percent on these things. UPDEGRAVE: You can still do a little bit better than just getting the average return.

VELSHI: The next step up from that would be a CD that locks you in for a month or three months or six months.

UPDEGRAVE: Right. And you can. . Maybe for this emergency reserve, maybe you want to go out with something that locks in you for six months on the theory that you don't have all of your money in that, you have some in a money market account that you can get to right away and the six month is something you would roll over every six months.

VELSHI: But in an emergency, you knew that money would be available on you a certain date.

UPDEGRAVE: But ideally that would be the last part of your emergency reserve that you would have.

VELSHI: Walter remind our viewers of the investment you were just talking about, the auction rate investment and if they're going to take advantage of that, they should be cautious, they should discuss it.

UPDEGRAVE: Well I think at this point, people are just not going to get into those at all because the experience has been so bad. You'll see a lot of these unsecured notes that are out there offering big yield, foreign bank CDs. Annuities is another big one.

VELSHI: Ask all the questions up front when you are investing this money. When can I get it, if I needed it tomorrow or next week? Thank you for that, Walter Updegrave joining us from "Money" Magazine.

Coming up next on YOUR MONEY, college students all over this country graduated this week. We'll tell you which companies are hiring recent grads and how to ace the interview with them. You're watching YOUR MONEY on CNN.

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(UNIDENTIFED FEMALE): I'm a little concerned about finding employment and maintaining a lifestyle.

(UNIDENTIFIED MALE): Are you worried at all with the economy?

(UNIDENTIFIED MALE): A little bit, yeah. But I think I have hope. It'll be good.

(UNIDENTIFED FEMALE): I believe she's going to make a difference because she's got a passion that's beyond anything I've ever seen her have a passion for. She believes in what she's going on do and, yeah, she's going to make it. She's going to knock some doors down.

(END VIDEO CLIP) VELSHI: Oh, the passion of a recent graduate. The U.S. job market, by the way, has seen three straight months of job losses, so what's supposed to mean for all the students graduating from college?

According to the National Association of Colleges and Employers, companies plan to hire 16 percent more new college graduates than they did last year. Our next guest says that the market for entry level candidates is actually strong. Brad Karsh is the president and founder of Job Bound, JB Trading Solutions, and the author of this book, I just love the name this, "Confessions of a Recruiting Director, and the Inside Guide to Landing Your First Job."

Brad, I've been interviewing for you a long time so your first job must have been many years ago. But you've interviewed a lot of people for their first jobs and this is what you do for a living. You counsel young people on getting work. I imagine if you're in the financial services sector this isn't a great market to be graduating in to.

BRAD KARSH, JOB BOUND: It is not; unfortunately that sector is the one that is the hardest hit right now. But typically lots of them head into that field.

VELSHI: Because they get a great starting salary when there are jobs. But there are other things that you say are strong. Give me some since of where jobs are right now.

KARSH: Well, the top majors for students right now are things like accounting, engineering, computer science, business administration. And there are a lot of companies out there, especially larger companies that are recognizing that, hey, we've got this huge group of baby boomers that are all about to retire. In fact, it's estimated that at some companies 60 percent of the workplace is going to be gone in the next ten years and they need to fill the ranks, great place to start, college students.

VELSHI: What do you do? You're a college student. The world is your oyster, you've got your GPA, and you've got your diploma. In many cases I think some people think that should get them a job. What is it that you -- what's the one piece of wisdom that you need pass on to college students or if their parents are watching us that they can tell their kids?

KARSH: If you don't have a job right now and you've just graduated, my best piece of advice is be flexible in the job search. A lot of students kind of go into the job search right after they graduate and say I want to work for the big four accounting firms in New York City and if they don't get that job, then they're devastated. The fact of the matter is there are thousands of accounting firms lets say in all sorts of different places and if you can think medium size, even smaller size, and those kinds of companies have lots of openings right now. The bigger companies they hire well in advance. The smaller and medium size company, they do just in time hiring. They're looking for people now.

VELSHI: All right. And we've got a list that we can show you on TV of a lot of the companies that are actually that have jobs that they are filling right now. What's the sense of career? Your first job out of college, is it the job that's going to set you up for your career, is it the job that you want because should you have a job, how should you think about holding out for the perfect job versus taking what's available?

KARSH: I'm not a big fan of holding out for the perfect job because the fact of the matter is your first job is just that. It's your first job. It's not 40 years ago where you had one job for the next 40 years. The fact of the matter is right now people have by the time they retire something like seven or eight different jobs or careers that they go if to. Your career path is a winding road. It's not straight. So get something, get some experience. You don't want to go this to something you know you're going to hate, but get some experience and then determine where it's going take you.

VELSHI: What do you call graduates these days?

KARSH: Millennial.

VELSHI: What's their biggest issue when they go to work in their first job? I know you counsel both the people who get those jobs and the companies that have their struggles. What's the big struggle?

KARSH: Well, there are a lot of struggles on the part of managers and millennial in the workplace. And this generation is not better it's not worse it is just very different, and the biggest thing I'm hearing from employers is this incredible sense of entitlement that this generation has. They come to work after six months; they want to be a VP. After six months they want to run the company. So my advice for college students be patient, recognize you do need to pay your dues and there's something to be said for experience.

VELSHI: Brad Karsh of Job Bound, good to see you. We'll pass that advice on and we'll talk to you again.

Coming up after the break, how a new ethanol plant is having a positive impact on one small town. But first, this weeks "Right on Your Money."

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(UNIDENTIFED FEMALE): A quarter of both men and women are shopping online mostly at work to hide purchases from their partner.

(UNIDENTIFED FEMALE): It's especially a problem if it gets in the way of paying off debts or you're financing, or you get your credit card problems.

ROMANS: Don't ignore signs that you or your partner has a problem such as keeping a secret bank account, stashing money or hiding purchases and bills. (UNIDENTIFED FEMALE): You'll be up set; you are going to be angry. Use it as an opportunity to figure out why this is happening, what may have triggered it and how to prevent it.

ROMANS: Agreeing on a plan is the best way to stay financially faithful.

(UNIDENTIFED FEMALE): Whether it is an annual vacation, or saving for your child's college education, keep those things in mind, you feel that you're going through a goal with your partner. You're more personally responsible for your money and for how it's spent.

ROMANS: Christine Romans, CNN, New York.

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VELSHI: Critics of the use of corn to create ethanol say that it is one of the main reasons that food prices are up around the world. But there are some people who disagree with that. Home to only a thousand people Cambridge, Nebraska is just one of the many small farm towns across the U.S. Midwest that is feeling the positive economic effect of corn based ethanol.

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VELSHI (voice over): Cambridge, Nebraska recently partnered with standard ethanol creating a $110 million dollar production facility on the edge of town.

ANDELA TAYLOR, DIR. CAMBRIDGE ECONOMIC DEVELOPMENT: Ethanol is really the first big industry that is a major value added contributor to our Ag economy. So for the first time in history, our farm products are being utilized right here and turned in to very high value added products.

VELSHI: Michael Houghtelling is one of the 37 new employees hired at the plant. After finishing school, Houghtelling like many left Cambridge moving his family to seek better job opportunities in a larger city.

MICHAEL HOUGHTELLING, STANDFORD ETHANOL EMPLOYEE: When I left Cambridge, there were very few jobs. I found out this was here and I was like, you know, Cambridge finally has something that's worth going back for.

VELSHI: During the 18 months that the plant was under construction, the town of Cambridge received an economic shot in the arm. Restaurant owner Richard Barnes owns the town talks. Barns took a financial risk expanding his eatery hoping the ethanol plant would bring business.

RICHARD BARNES, RESTAURANT OWNER: When I saw the crowds come in and being able to develop a nice place like this, I now am able to draw from about a 50 mile radius. But basically the ethanol plant development gave me the security to build. VELSHI: Critics of using corn to create fuel say it's one of the main reasons why food prices are up around the world. At roughly $6 a bushel, they say farmers are choosing to go plant more corn and less wheat, knowing that the corn will yield more money in the marketplace. Not true, says Jerry Peterson, a Cambridge farmer for more than 40 years.

JERRY PETERSON, FARMER: Ethanol gets the blame for the price of food going up, but it's really the price of oil that I believe is the main culprit. For every bushel of corn we run through the plant, we get three gallons of ethanol. Which will mean three gallons less of corn oil.

VELSHI: But even in a town overwhelmingly positive about corn ethanol, there are skeptics.

ROBERT THOMPSON, CAMBRIDGE RESIDENT: I don't think it's really been well researched myself. I think it's very foolish to be burning corn out of the tail pipe of your car.

ROBERT LUNDEEN, CEO, STANDARD ETHANOL: We're not the solution to the energy crises, we are not the cause of the shortage of food, and we're truly builders of a more stable, higher quality living in these rural communities that we're really on the downhill slide.

VELSHI: For Michael Houghtelling, it's a quality of life unavailable before ethanol.

HOUGHTELLING: It is just nice being able to move back.

VELSHI: Thanks for joining us for this edition of YOUR MONEY for more on the stories that matter most to your wallet, tune into "Issue Number One" each weekday here on CNN at 12:00 p.m. Eastern.

And we'll see you back here next weekend Saturday at 1:00 and Sunday at 3:00. See you then.